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Utilize the information given below for Moonstar Villas, Inc. for 2008 and 2007 to reply the problems that are given below. Moonstar Villas uses the straight-line depreciation method.

                                                  2008          2007

Property, Plant, and Equipment     $250,000    $190,000
Accumulated Depreciation             100,000       85,000
Depreciation Expense                     62,500      47,500
Net Sales                                 1,000,000    900,000
Total Assets                               625,000     475,000

1) Find out the average life of Moonstar Villas' property, plant, and equipment rounded to one decimal place using the data of 2008.

A. 1.61 years
B. 2.50 years
C. 4.00 years
D. 10.00 years

2) Find outhe average age of Moonstar Villas' property, plant, and equipment using the data of 2008.

A.1.61 years
B.2.50 years
C.4.00 years
D.10.00 years

3) Find out the asset turnover ratio for Moonstar Villas for 2008.

A.1.60 times
B.1.82 times
C.4.55 times
D.4.00 times

4) In the year, Moonstar Villas sold few equipment which had the original cost of $57,500. Which statement is true concerning transactions which may have occurred during the period?

A. Royal purchased extra equipment during the year
B. Selling price of the equipment sold was reported with net sales
C. The equipment which was sold had a book value of $12,500
D. The equipment had not been reported with Property, Plant and Equipment

5) If a company's asset turnover ratio decreased from 2007 to 2008, which of the following conclusions can be made?

A. The company was well-organized in 2008 in using its assets to produce profits
B. The company produced fewer sales in 2008 for each dollar invested in assets
C. The company was less profitable in 2007
D. The company is overinvested in assets in 2008

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M99897

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